The one-action rule is a legal requirement that states if a person owes money and has used their property as collateral, the creditor must attempt to seize the property before pursuing any other assets owned by the debtor. Consequently, the creditor is prohibited from simultaneously pursuing multiple methods of debt collection.
The one-action rule in debtor-creditor law states that if a debt is backed by real property, the creditor must initiate foreclosure proceedings on the collateral before pursuing the debtor’s unsecured assets. This means that the creditor cannot sue the debtor for the debt without first taking legal action to foreclose on the property. For instance, if John borrowed $100,000 from a bank to purchase a house, and the loan is secured by the house, the bank can only go after the debt by foreclosing on the property if John fails to make payments. However, if John also owns a car that is not collateral for the loan, the bank cannot simply sue him for the debt without first foreclosing on the house. The one-action rule is in place to safeguard debtors from having their unsecured assets seized without the opportunity to address the debt through the foreclosure process. It also ensures that creditors cannot pursue multiple legal actions against the debtor for the same debt.
The One-Action Rule is a legal principle that requires a creditor to pursue only one action to recover a debt secured by real property.
Under the One-Action Rule, creditors must choose between foreclosing on the property or suing the debtor for the debt. They cannot pursue both actions simultaneously.
Yes, a creditor can still pursue other legal remedies, such as obtaining a deficiency judgment, if they choose to foreclose under the One-Action Rule.
Yes, there are exceptions to the One-Action Rule. For example, if the debtor fraudulently conveyed the property or if the property is abandoned, the creditor may be allowed to pursue multiple actions.
If a creditor violates the One-Action Rule by pursuing multiple actions, they may be barred from recovering any further debt from the debtor.
No, the One-Action Rule typically applies only to debts secured by real property, such as mortgages or deeds of trust.
Yes, a debtor can waive the protection of the One-Action Rule by voluntarily agreeing to allow the creditor to pursue multiple actions.
The One-Action Rule benefits debtors by providing them with protection against multiple legal actions and ensuring that creditors must choose a single method of debt recovery.
Yes, the One-Action Rule can be overridden by a contract between the creditor and debtor if both parties agree to waive its protection.
No, the specifics of the One-Action Rule can vary between jurisdictions. It is important to consult the laws of the specific jurisdiction to understand its application and any potential exceptions.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 17th April 2024.
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